Do you think relying only on the stock market is going to help you come to your dreams true?
What if stock market as a whole is performing based and giving bad results.?
So it is like that you have to make diversification even in the asset class.
This is the most important strategy which determines the total return of your investment. This investment strategy involves all types of analysis for determination of proper asset class.
This strategy is to be applied first and then followed with other strategies. It helps you divide your capital properly to different asset class so that you can invest more in the high-profit asset class and low in the low-profit margin area.
In this way, your financial goal is achieved and loss in any asset class is managed with other, in short, you will never run short of money and your money will keep on growing.
Asset allocation investment strategy will help you to provide different weighting to the different asset class in your portfolio. Through this, you can build up your portfolio as per your financial plan. After giving different weights to different asset class than in that particular asset class diversification are made.
This decides the total return you will earn the more.
For example, if the stock market gives 10% return and the bond market gives 5% return then your return will be 7.5%.
Sometimes it may happen that stock market in total is not performing well but bond marketing is giving great returns. This strategy will then save you from such loss and help you to feel financially secure.
This involves six types of asset allocation strategy:
- Strategic Asset Allocation.
- Constant-Weighting Asset Allocation
- Tactical Asset Allocation
- Dynamic Asset Allocation
- Insured Asset Allocation
- Integrated Asset Allocation
Are you the right person? Who should use this?
This is for those who don’t want to take the risk and feel financially secure with their investment. With this strategy, you can dilute your risk level and rely on different asset class to grow your wealth.
This strategy needs to be performed by every investor who has some financial goal. Asset allocation is a prerequisite before any investor starts investing. This will help to strategize the portion of return you will get and manage the risk associated with it.
You first need to gain knowledge of all other asset class and know which one is feasible for you to work with. Make sure you have right knowledge from the right source and keep yourself updated with all asset class.
- Need to be done before starting any strategies, primary requirement for an investor
- Build portfolio with different asset class
- Helps to identify and get a financial goal
- Cover the risk associated with investment
This Strategy basically emphasizes on diversification not only on the type of stocks rather among different asset class. A person with more diversification is one with more financial security.
This is usually done when you have knowledge of all type of asset that you can avail and grow your money.
After all its all your hard earned money and you cannot leave it as it is without any security relying only on chance.